Synopsys, Inc.

Synopsys, Inc.

Synopsys, Inc. Jonathan Poland

Synopsys, Inc. (SNPS) specializes in developing electronic design automation (EDA) software products for designing and testing integrated circuits. Their product offerings include solutions for digital and custom IC design, verification, FPGA design, intellectual property (IP), and system-on-chip (SoC) infrastructure. Their Digital and Custom IC Design solution provides digital design implementation solutions, while the Verification solution offers a range of verification options including virtual prototyping, static and formal verification, simulation, emulation, FPGA-based prototyping, and debug solutions.

Synopsys also provides IP solutions for a variety of applications such as USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy. They offer logic libraries, embedded memories, processor cores, software, and application-specific instruction-set processor tools for embedded applications. Additionally, they provide security IP solutions, IP solutions for the automotive market, and SoC infrastructure IP, datapath and building block IP, and verification IP products. The company offers various tools such as HAPS FPGA-based prototyping systems, virtual prototyping solutions, and Platform Architect solutions for SoC architecture analysis and optimization. They also provide a series of tools for designing optical systems and photonic devices.

Synopsys offers additional services such as security testing, managed services, programs and professional services, and training to help their customers detect and remediate security vulnerabilities and defects in the software development lifecycle. They serve customers in a variety of industries including electronics, financial services, automotive, medicine, energy, and industrial areas.

as of February 22, 2023

A look at the company’s numbers and it’s easy to see why the stock is up big. Since 2013, every dollar in retained earnings has equated to $11 worth of market value. If that number continues, it’s only a matter of time before the company is worth over $1 trillion. That is not likely to happen anytime soon, but the question is this… priced at $54 billion, could it 10x in the next 10 years? No. If the current 16% retained earnings growth rate continues, the top end market cap would be in the $330 billion range. Don’t get me wrong, that’s fantastic growth. In fact, if achieved and you own some stock, please pat yourself on the back. The problem with this is that the total addressable market for EDA solutions is anticipated to reach somewhere close to $20 billion by the end of the decade. Synopsys gets more than 65% of its revenue from this segment. Today, that equates to 50% of the the market. Saying that it can keep that market share, it would be doing around $15 billion in sales by 2030. At 10x sales, that’s a $150 billion valuation… not quite 3x from today’s price.

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